by Pavithra Ravinatarajan RPh
As pharmacists at some point or another we’ve all had the thought cross our minds. Is ownership for me? For some people the idea strikes no interest. For others it’s in their blood. They knew the day they got their pharmacy school acceptance letter that this is what they wanted to do. Then there are those in the middle. Who aren’t quite sure if it is or is not something that is for them. This series of articles will bring some useful concepts, considerations and decisions to help you understand if ownership, and what type of ownership is for you and answer “Are you fit for ownership?”
Pharmacy – Ownership Types
Ownership can mean many different things. Do I want to be the only owner, partial owner, an associate or something else? What does this mean financially, what does this mean for me operationally, and what does it mean personally.
Understanding what is available to you and what aligns with your financial appetite is important. You want to ensure you are comfortable with your decisions but also understand that as with operating any business there is risk. The important thing to remember is that it is CALCULATED risk.
Do I want to be an independent or under a banner?
There are certainly various pros and cons to both options. The key is to figure out what is best suited for you. Here are some questions you can ask yourself:
- How independent and confident am I about making business decisions?
Making a decision can come easily to some people and can be one of the most difficult things to do for others. Where on this spectrum do you fall? Do you have a trust circle you can lean on for experienced advice and support? A banner can be a huge form of support. They will already have a list of preferred partners you can work with that they trust. Banners can also provide support by bringing you a network of other peers you can bounce ideas and speak to about your experiences. It’s important if this is something you feel you need in your business or are you comfortable doing it independently.
- How creative and strategic am I?
The main reason that many people decide to go with a banner is marketing. Banners put forth a lot of effort in marketing and strategic support. Having a recognizable colour, logo, or name on your pharmacy can bring immediate comfort to some patients. There are support services regarding regulatory changes, scope of practice initiatives, and much more regarding day to day operations. It’s important to determine if you need this support. Perhaps you know your community well or have a background in marketing.
Whether you choose to be completely independent, go with a banner, be an associate or something in between. The choice should suit your personality, skills and your vision for what you want today and in the future. Regardless of what decision you make you may want to take the time to speak to the banners to understand their offers. Ask around and make sure you’ve done your research.
Is it better to start NEW or ACQUIRE?
Where and how you want to start your pharmacy is a big decision. Some owners spend years finding the right store or location to start their practice. How much do you know about the difference between starting a brand-new pharmacy scratch vs. buying an established pharmacy?
Again, this decision depends on the risk and commitment you are willing to make to your pharmacy. When you start a pharmacy from scratch you have a blank canvas. You can determine what type of patients you are targeting. Will you be integrating a clinic in your location or virtual care? The entire layout of your pharmacy is yours to design (within the limit of your chosen location of course). This will require getting permits, hiring contractors, getting employment contracts for prescribers and much more. You will make sure you can be organized, dedicated and have a clear game plan. It is also important to have realistic expectations when you open a pharmacy from scratch. Patients need time to know your store is there. They will need a reason to walk into your store. The average start-up pharmacy takes about 2 years to break even. You will need to slowly build your place in your community and win the trust of your patients. Have a financial forecast of about 5 years for your store and remember these are assumptions and educated guesses, they may not necessarily come true.
Acquiring an established pharmacy often comes with a higher price tag, and rightfully so. These locations often have an established pool of patients. They may have a clinic already running and seeing patients regularly near by or next door. It is important to understand that when you acquire a pharmacy you are buying something that is already set up and running. In this situation the most important thing to understand are the store’s financials. Look at the location’s financial statements, the location’s history with the area’s pharmacy college, understand the reasons the current owner is looking to sell and make sure you feel comfortable. There are no ‘stupid’ questions. When buying an established pharmacy, the more you know the better it is for you. An established pharmacy can be changed but it is important to remember that changes may not take easily to patients. They are used the faces they have seen and the service they have been getting. Have a plan as to how you will or will not be changing the way this pharmacy operates. It is not always a possibility but working relief or a few shifts at a store you intend to buy can help you understand workflow but also have patients familiarize themselves with you.
Do I want to go it ALONE or with PARTNERS?
Whether you are an independent or banner store, whether you will be acquiring or starting from scratch, operating a pharmacy comes with a price tag and time commitment. An important question to ask yourself is can I do this alone? Do I have the finance to support my pharmacy business and do I have the time to commit to this business to ensure it succeeds?
For many people they consider undertaking their first pharmacy venture with a partner or as a group. Financially doing something with others helps mitigate your individual risk but remember that also means you must share the profits. There are various pros and cons to both options. Consider these questions:
- Do I work well with others? How easily am I able to share decision making and compromise.
- Do I know who is going to be partnering with me? Do I know this person well and how well do we get along?
- Do I trust other people? Specifically, how much do I trust my partner(s)?
A partnership is similar to any relationship there will be great times and bad times. It is important you are able to separate emotions from business and work together well. This is a venture you are undertaking together make sure you are all transparent, feel comfortable with each other and have an agreed upon decision making process. Many hands do make light work, but decisions must be made together and have alignment.
Owning a pharmacy can be a great experience if it is planned and thought through. Remember your WHEREs, WHOs, and HOWs are important in pharmacy ownership.
*The term banner is used throughout this article. There are various banner/franchise/associate models available that give varying autonomy to the owner. Understand the differences and the one that’s right for you*